Penalty plea over child cash
A huge nationwide Child Support debt made up mainly of penalties and interest has sparked claims by a Napier-based former MP that it is a “ruthless” scheme forcing people to shirk responsibilities to growing youngsters.
Latest figures show Child Support principal comprises just $661 million of the $2.617 billion the Inland Revenue Department claims it was owed at the end of December. Stuart Nash said it’s time for an amnesty on penalties and interest, which make up 74.7 per cent of the debt.
The call is supported by Union of Fathers national spokesman Allan Harvey, of Auckland, but he says: “Unfortunately, I don’t think it’s likely to happen”.
The Government is “highly embarrassed” by the size of the debt, which he said is part of a “revenue” system often supporting the “state” ahead of the child.
He said the IRD had shown “virtually no flexibility” in relation to 10 per cent “immediate” aspects of the penalties, often accrued and irreversible well before the target is aware any regime is in place, and politicians regard it as “too difficult” a subject to handle.
Figures for the last five years show that while the amount of principal owing at the end of each year has risen 26 per cent (from $525 million to $661 million) the total for penalties and interest has increased almost 109 per cent (from $938 million to $1956 million).
Combined, it represents a 79 per cent increase from the $1.464 billion reported at the end of 2008 to the $2.617 billion reported recently as the Child Support Amendment Bill progressed through its latest stages in Parliament.
The figures stem from questions in Parliament to Inland Revenue Minister Peter Dunne instigated by Mr Nash, a 2008-2011 Labour List MP and Napier candidate at the last election.
Mr Nash says an amnesty is needed to help non-payers “re-engage” with the system, and in some cases their families.
“The penalty regime is ruthless,” he said.
“Once the penalties and interest begin to mount up, it becomes impossible for many people to see their way clear, so they disengage.”
He said it’s bad not only for the individual charged with paying the debt, but also for the children, forcing some parents to leave the country or into other situations where they never see their children.
Mr Harvey said the current regime is “driving” people into not paying, and there are impacts for the ongoing relationships between split parents.
The Family Court has recognised the issue at times in directing the IRD to waiver penalties and in some cases Child Support assessed by the department, but it takes a court process, such as custody proceedings, to initiate such relief.
Targets say the objection and appeal processes are difficult and confusing, and people with valid issues give up because of the weight against them.
Mr Nash suggests a three-month amnesty to help right what he says is a “travesty,” and said those who have disengaged from the payment process, due to the inability to see their way clear, should approach the IRD “and see if you can come up with an arrangement to wipe the penalties once all principal is cleared”.
“Basically, this money is lost from the system,” he said.
“I am sure the IRD would be open to an arrangement whereby debt paid off under an affordable arrangement would be acceptable.”
He said he would be happy to help negotiate on behalf of those who want to do what’s right, but may be lost for a solution.
Napier MP and Government minister Chris Tremain said changes to child support announced by Mr Dunne do not include an amnesty. “Parents remain responsible for the financial support of their children after the breakdown of a relationship,” Mr Tremain said.
He said the changes are based on extensive public consultation, and update the way the IRD administers the scheme “making improvements to payment, penalties and debt rules that encourage parents to meet their child support obligations on time and prevent those who fall behind in their payments from dropping out of the system.”
Outstanding child support debt in the Napier office area, covering Hawke’s Bay, has increased from $47.9 million in 2009 to $72.7 million in 2012.
The Bay rates 12th of 16 in terms of the debt ascribed to each office area throughout the country, while over $610 million was owed by people overseas